Dunnellon sells failed fiber optic system

Saga far from over, however, as debt remains

Published: Tuesday, December 24, 2013 at 1:21 p.m.

Last Modified: Tuesday, December 24, 2013 at 3:30 p.m.

The city of Dunnellon finalized the unloading of its failed fiber optic utility when the mayor signed off Monday on handing the business over to Florida Cable Inc. The Astor-based company bought Dunnellon's cable endeavor for $1 million and also will take over the city's $1 million equipment lease obligations.

When current Dunnellon Mayor Nathan Whitt took office in 2012, the fiber optic venture — called Greenlight Communications — was costing the city about $300,000 a month in losses and left the city with about $7 million in debt. Although Whitt quickly moved city staffers out of Greenlight Communications and into other departments, the business was still losing as much as $60,000 a month by the time the city sold the floundering business.

But the sale is not putting an end to the Greenlight saga.

Regions Bank last month sued Dunnellon for defaulting on a nearly $7.4 million loan that the city used to fund Greenlight. The lawsuit came soon after talks between the city and Regions to rework the loan broke down.

"Now we'll go to court if that's what they want," Whitt said.

He said the bank should have seen the Greenlight loan to Dunnellon as a bad one and needs to take some responsibility. He also said the city offered to give Regions the proceeds from the sale and pay half the remaining debt if the bank would write off the other half of the debt, but negotiations failed.

A settlement would have been the "only way to end the madness," Whitt said.

The city recently hired a lawyer specializing in bankruptcy to help with its Regions Bank loan problems.

Whitt said that while the debt should be repaid, Dunnellon does not have the money.

He also said residents never had a choice about the Greenlight venture. He said the issue was decided by the city council and that the city's 1,700 residents should not be burdened by a loan the city never should have asked for and the bank never should have made.

"They made a bad loan, and my take is that a judge will see it that way, too," Whitt said.

Whitt also said the Greenlight Communications business plan "was junk" and never should have been put into operation.

Attempts to reach Regions Bank officials for a statement were not successful.

In late November, Dunnellon officials notified the governor's office about the city's financial emergency, saying its debt far exceeded its $2.5 million annual budget.

By state law, municipalities must inform the governor's office that they have financial emergencies when it appears they will not be able to meet their debts. The state then can monitor the municipality's attempts to resolve its problem, or it can step in and impose a solution.

Whitt said that, for now, Dunnellon asking for bankruptcy protection is off the table.

"They (the state) do not want us to go bankruptcy," he said. "They will not allow us to entertain that."

<p>The city of Dunnellon finalized the unloading of its failed fiber optic utility when the mayor signed off Monday on handing the business over to Florida Cable Inc. The Astor-based company bought Dunnellon's cable endeavor for $1 million and also will take over the city's $1 million equipment lease obligations.</p><p>When current Dunnellon Mayor Nathan Whitt took office in 2012, the fiber optic venture — called Greenlight Communications — was costing the city about $300,000 a month in losses and left the city with about $7 million in debt. Although Whitt quickly moved city staffers out of Greenlight Communications and into other departments, the business was still losing as much as $60,000 a month by the time the city sold the floundering business.</p><p>But the sale is not putting an end to the Greenlight saga.</p><p>Regions Bank last month sued Dunnellon for defaulting on a nearly $7.4 million loan that the city used to fund Greenlight. The lawsuit came soon after talks between the city and Regions to rework the loan broke down.</p><p>"Now we'll go to court if that's what they want," Whitt said.</p><p>He said the bank should have seen the Greenlight loan to Dunnellon as a bad one and needs to take some responsibility. He also said the city offered to give Regions the proceeds from the sale and pay half the remaining debt if the bank would write off the other half of the debt, but negotiations failed.</p><p>A settlement would have been the "only way to end the madness," Whitt said.</p><p>The city recently hired a lawyer specializing in bankruptcy to help with its Regions Bank loan problems.</p><p>Whitt said that while the debt should be repaid, Dunnellon does not have the money.</p><p>He also said residents never had a choice about the Greenlight venture. He said the issue was decided by the city council and that the city's 1,700 residents should not be burdened by a loan the city never should have asked for and the bank never should have made.</p><p>"They made a bad loan, and my take is that a judge will see it that way, too," Whitt said.</p><p>Whitt also said the Greenlight Communications business plan "was junk" and never should have been put into operation.</p><p>Attempts to reach Regions Bank officials for a statement were not successful.</p><p>In late November, Dunnellon officials notified the governor's office about the city's financial emergency, saying its debt far exceeded its $2.5 million annual budget.</p><p>By state law, municipalities must inform the governor's office that they have financial emergencies when it appears they will not be able to meet their debts. The state then can monitor the municipality's attempts to resolve its problem, or it can step in and impose a solution.</p><p>Whitt said that, for now, Dunnellon asking for bankruptcy protection is off the table.</p><p>"They (the state) do not want us to go bankruptcy," he said. "They will not allow us to entertain that."</p><p><i>Contact Fred Hiers at 867-4157 or fred.hiers@starbanner.com.</i></p>